Microsoft Is Making An Astonishing $2 Billion Per Year From Android Patent Royalties

Microsoft is generating $2 billion per year in revenue from Android patent royalties, says Nomura analyst Rick Sherlund in a new note on the company.
He estimates that the Android revenue has a 95% margin, so it's pretty much all profit.

console launches are very expensive sony sold every except shuhei yoshida's toupee to get liquid enough for their launch . funny thing about stock analysts they actually don't like companies spending money .

It's not just the launch. If you add up the profit and losses since the first xbox Microsoft have yet to make money with the xbox. That kind of performance doesn't make investors very happy, that's why it's often suggested that they sell off the division.

The RROD cost them billions, they have yet to recover all their costs. If the xb1 is profitable early on then perhaps the breakup talk will go quiet. On the other hand if it does poorly then expect it to continue and potentially intensify.

What's hilarious is how all the Sony fanboys constantly rip micro$oft (<--example) for being incredibly greedy and how they rip off consumers, yet once you get back into the real world, you'd realize that Microsoft is currently about even on their Xbox division.

Bleedsoe9mm- No, the 360 was no different. Microsoft didn't "rape" consumers, "screw" gamers, or all the propoganda from uninformed idiots. http://www.forbes.com/sites...

Sony has made far more profit from their gaming division, and to thank their lemming-like followers they release a console that can't do 1080p/60 as standard. At least microsoft has the excuse of not making any money off Xbox, so they couldn't go crazy on hardware this time.

That is because arsehole groups.. I mean "Activist Funds" like Value act only think in the short term. They rather stay in a slowly declining market of profit (Like MS and there Business services and Server software) then trying to get into new markets.

They forget for instance that MS knows very well that Servers are more and more moving to Open Source solutions. MS also knows very well that the consumer market is where the money is. THey also know that the time of "paid operatings systems" is also on their decline. Either you get an Open Source OS or you'll be using a cloud based system in about 10 years.

So what Value Act wants is basically delayed suicide, well murder as they will pull out with a profit before that happens. At the expense of a lot of scientists and Engineers now (MS research) and later the whole company... losing their jobs. They would make a short term very high gain, and get richer, while they socialise the loses for the company to the normal taxpayers in the form of unemployment costs and bailouts.

They did this before with Motorola and they aren't the only "fund" out there doing this crap. They defend it with sayings like "Cutting the fat!" or "We make them profitable again!" or "We make them more profitable!". But it is always a short term gain, and a long term loss.

Sadly that is what most stock owners care about. There are exceptions like Isoa Okawa (SEGA's stockholder after SEGA wend bankrupt for the n'th time) but such "sugar daddies" are rare.

The few companies that survived this and aren't sold off/bought out, are set back years. They either go bankrupt in the end anyway, or they take for ever to regain some form of "healthy business".

The selling everything to get liquid had more to do with the change in paradigm from cell architecture to AMD chipsets. They had to build factories to build the Cell. Once those were no longer needed, they sold off those properties. True, Sony has a set of financial issues all it's own and they are currently addressing them through restructuring, less aggressive forecasting (stop guessing at the money market), and a new approach to consoles (less hit up front). MS, on the other hand, had the issue of investors that didn't see the return that was expected with the Xbox brand. After 10 years of "heavy" investment, they keep seeing money being thrown at it to modest to no real gains. The issue is simply that they thought that they could get a fast buck and game's industry dollars are not fast. When they are, they must be carefully managed and applied to the future of the brand.

Wow, some analyst says MS should drop out. Wow, thats amazing. Gee I am an analyst too, how about I predict Sony folds due to loosing 95% of its value since 1985? Here is MS with more cash in the world than most companies and this shit is spun. Anything for hits.

@MMEHTA "They have lost billions but since 08 they have been recouping the loss from Xbox live and the 360 slim sales."

Yes, trouble is they've gone and invested millions upon millions more in their next venture - xbox one.

This cycle can only end if they do so well that they break even and begin to generate real profit. I'm not sure anyone sees that happening right now with the fiasco that has been xbox one so far. It's been nothing short of a catastrophe.

@JustPlay4 you do know Microsoft are worth more than Google? Also Themba76 no one can say they will never catch Apple as these things come in cycles. Look back 10 years ago and people would of said Apple would be worth more than Microsoft or that Samsung would of been bigger than Sony. The technology world can change over night and it goes round in cycles too. Look at Nokia who were untouchable but then along came the IPhone and it took the market by storm. Then everyone was saying Android will never be bigger than IOS yet it did.

It has also been said about Windows Phone but it is now growing and has 10% of the market around the world.

No one knows what will and wont be a success even in the gaming world its hard to say what will sell and what will not. Look at the stick the 3DS was getting and everyone one here was saying the PSV would walk all over it but Nintendo turned it around.

You fail to understand how business works. It's about properly leveraging your assets and maximizing return on investment. The fact is, MS makes a much better return in its other divisions when compared to the Xbox. Investors see this and want MS to "trim the fat" and focus on its money-makers. The Playstation brand on the other hand, is quite successful for Sony (even though the company is not doing well as a whole); therefore, investors and analysts aren't calling for Sony to exit gaming.

Firstly, this is FAR from the first analyst to propose this. It's been reported multiple times. Second, IF we were talking about SONY...you'd have a valid argument. Sony has not been turning a profit either and actually lost more money on the PS3 then MS did with the Xbox. MS has a shit ton of cash...correct. The investors want to continue a venture that costs them more than the effort and losses are worth!?!? See, that's the issue. WE see MS and think endless buckets of cash. Investors see MS and think...that's money out of MY pocket! Personally, I don't think Xbox will fold. However, if there is not much improvement. There WILL be pressure to restructure, augment, and scale the operation to achieve a much better profit margin.

Im a sony fanboy but this would be terrible for the industry and any serious gamer wouldnt welcome it. Competition ensures the best value and range of products/services for consumers. Microsoft has done fairly successfully with Xbox regardless in terms of its brand awareness and expanding audience.

The logic is not equivalent. Firstly, analogies are to understand a concept or idea, you have changed the idea.

An abuser in the home is life-threatening. Microsoft in the gaming business, what's so life-threatening there? Have you been physically assaulted/raped by a company? No. You clearly do not understand the logic behind Lolrus' comment and you are trying to make analogies with your false ideas.

If you wanted a better analogy with your situation, it would be like having two people living with you; both of which are offering better deals than the other to get the second largest bedroom.

Lolrus' is absolutely correct. Without competition one company could drive the prices up as high as they want because there's no opposition. It's equivalent to you racing yourself, no matter how bad you play you always win.

@logicstomper consoldtobots is spot on with his/her comment. Microsoft has been a parasite to the gaming industry. This is undeniable, or do I have to point you to early this year when they tried to strip consumers of there rights?

I know. There was an article how indie devs get the unity engine to develop on for free(which is amazing). But it wasn't on the front page because it was titled in an awful way and COD still remains 720p.

No way sega comes back as a console if ms bows out. They already lost all investor confidence and consumer credibility for hardware. Plus they already whored out all thier exclusives that gave them an edge in the first place.

Sony Loses $2.2 Billion in Market Value After Forecast Cut http://www.bloomberg.com/ne... They all loosing money, why do you think they want to keep moving forward within the DLC arena? and even though they are loosing money the forecasts are better, anyway I think MS makes something like 2 billion on android royalties? though I would need clarification on that.

if they make what they need, and are selling everything made - at a profit, then this seems unlikely.If anyone is, it is sony with PS4 - they may be outselling MS's xbox, but every PS4 is sold at a loss. If they make what they need, and are selling everything made - they still have overall loss, whereas MS has an overall profit. even if it's a very small profit, it's still profit.

I think Sony has cornered enough of the market to be profitable. Arty least with their game sales. It seems their support from this website alone would keep them afloat.(haha) Even though the company practically bleeds money....

Their Android royalties pretty much pay for the xbox. Think of it like they put their hands into a bank vault and just grab money. Thats how profitable that is to Microsoft. This is why they want to spin out the xbox part of the company. They feel like it could become profitable....just not android profitable.

Go here: http://www.microsoft.com/in... and search for "Entertainment and Devices Division" Microsoft has increased their revenue from the Xbox division (which also includes skype and surface) by 10% in the past to years.

It makes around 10 BILLION DOLLARS and had an operating income of close to ONE BILLION DOLLARS the past year. It was profitable in the past 4 or 5 years. Why would someone in their right mind drop a business which is so profitable!?

But this is what happens when every idiot can declare himself analyst, without even being able to comprehend quarterly and annual reports. And for every fool you have a trail of idiots that will believe him because "it was written on the internet so it must be true"

These analyst are not looking at whatever profit the Xbox division is doing right now. To them the total loses of the division since the Original Xbox is all that they see, which is not fair since MS has proven the division is now profitable. These analyst just can't wait till the division finally recoups all the loses at the beginning.

But, that's their job. It's not about a concept of "fairness". It's business. If a business has one area that is losing money while the others are not. It's only natural to analyze what the issues are and how they can be changed. The investors have been pressuring Balmer and the likes for years to make money or get out. They want to see profits akin to what their other divisions are making. They could give a damn about what the Xbox 1 CAN do or how good Titanfall is. Their bottom line is...will it remain profitable or will it take money out of my pockets?

But its no longer losing money Ice, what the analyst are getting at, is the Xbox division has not yet recouped all its loses since the Original Xbox. That's different from not being profitable. They want a fast return on the Xbox investment which I understand but to say its not profitable is misleading.

well sony was also in hot water after the production cost of PS3, seems Microsoft is also feeling the burn. hope they stick with X1, i mean I'm a playstation first but if sony just went under that would suck. so hope they stay in the race. Long Live Gaming!

Nah, if it wasn't for RROD, Xbox division would be considered a cash cow, there's no way investors would overlook that potential so long as such faults are ironed out. They are selling the Xbox One at no loss, are looking to bolster their cloud service, and are finally realizing their goal of bringing windows to the living room. The next generation might be delivered exclusively in the cloud, there's no way MS won't attempt to maintain this foothold.

Ah, that investment group again, Value act. The same guys that ruined Motorola and turned it into a sham of it's former self. Getting thousands of people fired. Oh yes on the short term it is so much better to drop it, and stay in a market of server software and business services that is slowly declining for you in favour of a superior open source based ecosphere.

But hey at least for those few years... you had your dividend and your profits while MS Research Employees lost their jobs on top of other engineers from the other departments. Only a gloom omen for the rest of the company to go bankrupt and like Motorola .... be just bought out for their patents.

Investment groups like Value Act make me puke! They are what is wrong with the economy, they say they slim things down to "improve them".. but their track record clearly shows it is always a short term gain for them, and the losses get paid by the government/society in manners of bailouts and unemployment help.

Fuck you Value Act and the bleeding arse you and your kind of people come from.

Sorry I feel quite strongly about these kind of "funds" and "Activist Investment groups". After seeing what they did to great companies like Motorola (the minds behind so much technological innovation). It would be a shame if any group of used tampons like that, would ruin a company like Sony, Microsoft, Apple, Nintendo, Dell, etc.

This isn't capitalism.. this is phoney capitalism which is very close to mobster like behaviour.

Mark my words, people buying the Bone are going to be screwed hard when MS leaves the industry. They did it with (ironically) the Xbox 1 (OG).
The new CEO will be handpicked and the Xbox division will be spun off, that is to say annexed from MS and run as a seperate company. It wont last if its posting losses like this!
In any case, If I was an MS investor, I would be pretty pissed if I read articles like MS spent $100000000 making the Bone controller etc. Wasted expenditure. Its going down and its going to be one hell of a boom when it does.

I do t think ms would be giving away free xbox ones or KI if this was the case. Now if he said we could make that much more by doing something else I could believe that, but to make it seem like the division is leaking that much money? That I don't believe. And who ever wrote this article get off your ass and do a damn interview with direct questions. I'm tired or reading half assed articles with words like "suggested" . Either he said it flat out or he didn't. A monkey can type on a damn keyboard gentlemen, that puts you in the same group. If you wanna be a journalist go out there work for it and get hard facts. If not you're just a blogger or the monkey with the keyboard